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Capital Markets

Best corporate borrower – Latin America: América Movíl

The first global peso bond crowned a great year for the Mexican telco.

The world’s best borrowers in 2006

América Movíl is arguably the most successful wireless telco in the world. Just five years after it was spun off from Telmex it is worth $75 billion, three times the value of its former parent. In an industry notorious for requiring enormous capital investment, América Movíl recently announced acquisitions in Venezuela, Puerto Rico and the Dominican Republic that could cost it as much as $5.5 billion. It said it would finance the whole deal out of cashflow – after paying shareholders an extraordinary dividend of $1 billion because there was simply too much cash lying around.

The only reason that América Movíl borrows at all, then, is for balance-sheet purposes. “There is a policy that it doesn’t pay our shareholders to have too little leverage,” says CFO Carlos García Moreno, who targets a net debt to ebitda ratio of 1.

With earnings growing and old debt amortizing, of course, América Movíl needs to keep on borrowing. For the first three years of its existence it borrowed in only two places: the international syndicated loan market for dollars, and the domestic Mexican bond market for pesos.

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